Cathie Wood Just Went Bargain Hunting: 2 Artificial Intelligence (AI) Chip Stocks She Just Scooped Up (Hint: Nvidia Isn't One of Them)

As CEO and chief investment officer of Ark Invest, Cathie Wood might be best known for her high conviction in speculative opportunities across industries such as genomics and cryptocurrency

When it comes artificial intelligence (AI), many of Ark's biggest positions are in volatile stocks such as Tesla and Palantir nologies

Over the last couple of months, however, Wood has quietly been rounding out her exchange-traded funds (ETFs) with semiconductor stocks

Let's explore two AI chip stocks that have recently become rising stars in the Ark portfolio

Is now the time to Wood's moves

The position is spread across the Ark Autonomous nology & Robotics ETF, Ark Next Generation Internet ETF, Ark Fin Innovation ETF, and Ark Innovation ETF

As of this writing, AMD has now become the 11th biggest position for Ark Invest overall

In fairness, AMD's rise at Ark has been influenced by some nounced price gains in recent weeks too

In my eyes, AMD's recent gains can be tied to the company's accelerating data center as well as bullish anticipation for its new AI accelerators during the second half of this year

Nevertheless, even with such a massive move in the price, AMD trades for roughly 36 times forward earnings

Although this isn't exactly cheap, s of AMD are well within their usual valuation range

My hunch is that AMD is still being discounted by some investors, primarily due to the enormous competitive threat the company faces from Nvidia

Considering how much momentum is fueling AMD stock right now, I think I'd sit on the sidelines for the time being

To me, the company's long-term spects are somewhat ambiguous so long as Nvidia remains king of the chip industry

While there is ly still good money to be made in AMD stock, there are more reasonable price points to build a position

Image source: Getty Images

I see TSMC as the most interesting opportunity within the broader chip landscape

Un Nvidia, AMD, Broadcom, or the cloud hyperscalers, TSMC doesn't specialize in designing its own chipsets

Rather, the company offers industry-leading fabrication services that bring semiconductor designs to life

This puts TSMC in a unique position as the company stands to benefit from rising spend in AI infrastructure over the coming years, regardless of which specific chipsets are witnessing the most demand

Looked at another way, investors in TSMC need not overanalyze which chip company will sell the most graphics cessing units (GPUs)

Rather, an investment in TSMC could be viewed similarly to a call option on investment in data center infrastructure and AI chips for the long term

While TSMC has witnessed some notable valuation expansion throughout the AI revolution, the company's forward price-to-earnings (P/E) multiple of 25 is still reasonable

Un AMD, I do not think rising competition is what concerns investors over a position in TSMC, though

Rather, it's geopolitical tensions with China that give way to uncertainty over TSMC's growth spects

Given the company's investments in geographic expansion, though, I think the concerns over China are exaggerated and ly baked into the stock at this point

As I wrote a few weeks ago, TSMC might be the best bargain in the AI market right now

Compelling secular tailwinds, combined with an industry-leading position in the fabrication market, strong institutional backing, and a reasonable valuation, make TSMC a no-brainer for long-term investors.